Impact Turn File - MichiganClassic 2013 CT

7/27/2019 Impact Turn File - MichiganClassic 2013 CT

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Corruption Good


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Corruption = Growth

Corruption leads to growth in 3rd world countries

Heckelman & Powell 2008 Heckelman is a professor of economics at Wake Forest University.

Powell was an Associate Professor of Economics at Suffolk University and an Assistant Professor ofEconomics at San Jos State University.

[Jac C. Heckelman & Benjamin Powell, Corruption and the Institutional Environment for Growth

Department of Economics Suffolk University, August 2008,

http://192.138.214.118/RePEc/docs/wpaper/2008-6.pdf pg 1]

Despite these widely held beliefs, some economists going back to at least Leff (1964) and Huntington

(1968) believe that corruption can enhance growth by allowing individuals to pay bribes in order to

circumvent inefficient rules and bureaucratic delays. Simply put, in much of the third world, corruption

is needed to get things done. If corruption is reduced without corresponding changes to eliminate

inefficient rules, business activity and economic growth may slow . If a first best solution of good rules

is unavailable then corruption that avoids some of the restrictions created by bad rules becomes a

second best solution and an alternative path to growth.

Despite negative econ development corruption is positive

Mironov 2005 He earned a bachelor's degree in Economics at Novosibirsk State University, amaster's degree in Economics at New Economic School (Moscow), and a PhD in Finance at Chicago GSB

in 2008.

[Maxim Mironov, Bad Corruption, Good Corruption and Growth, Graduate School of Business

University of Chicago, November 14, 2005, http://mironov.fm/research/corruption.pdf, pg 1-2]

There are several potential explanations for this empirical fact. One is that corruption helps to grease

the wheels in a country with poor institutions, allowing individuals to overcome burdensome red tape.

Another, suggested by Guriev (2004), is that even though corruption reduces red tape, officials whoexpect bribes tend to set ex-ante levels of red tape above the socially optimal level. Therefore, one

might find positive effect of corruption controlling for institution quality, even if the total effect of

corruption on economic development is negative. Yet another possible explanation is that economic

growth might feed corruption by providing additional demand for bureaucrat services. My empirical

results are consistent with all these explanations and I cannot distinguish between these hypotheses

using these data.]

Empirics prove; Corruption helps the economy

Zotin 1/30 -

*Aleksander Zotin, IS THERE SUCH A THING AS GOOD CORRUPTION? KOMMERSANT/Worldcrunch,2013-01-30, http://www.worldcrunch.com/opinion-analysis/is-there-such-a-thing-as-good-corruption-

/economic-growth-transparency-congo-kleptocracy/c7s10772/]

First of all, the size. A 3% drain on the economy is not the same as a 25% one. But size is far from the

only thing that matters. The structure is also important. Good corruption is often a way to grease the

wheels of cumbersome regulations, where officials speed up the decision-making process, helping

business. Often that means forced political support for regimes that are undertaking painful economic
http://192.138.214.118/RePEc/docs/wpaper/2008-6.pdfhttp://mironov.fm/research/corruption.pdfhttp://www.worldcrunch.com/opinion-analysis/is-there-such-a-thing-as-good-corruption-/economic-growth-transparency-congo-kleptocracy/c7s10772/http://www.worldcrunch.com/opinion-analysis/is-there-such-a-thing-as-good-corruption-/economic-growth-transparency-congo-kleptocracy/c7s10772/http://www.worldcrunch.com/opinion-analysis/is-there-such-a-thing-as-good-corruption-/economic-growth-transparency-congo-kleptocracy/c7s10772/http://www.worldcrunch.com/opinion-analysis/is-there-such-a-thing-as-good-corruption-/economic-growth-transparency-congo-kleptocracy/c7s10772/http://mironov.fm/research/corruption.pdfhttp://192.138.214.118/RePEc/docs/wpaper/2008-6.pdf


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modernization. One of the important signs of good corruption is that the money stays in the country,

allowing for economic growth. The American political scientist John Nye even calls this the "Switzerland

factor." The less that corrupt money leaves the country (often going to Swiss bank accounts), and the

more it is reinvested in the home countrys economy, the less damaging the corruption. The aim of good

corruption is to create a good investment climate and improve growth in private business. One of the

best examples of this good corruption was 20th century South Korea under dictator Park Chung-hee. He

often forced large companies to take care of his partys needs, and rewarded those companies loyalty

with low-interest loans and business preferences. He used the money to secure his partys hold on

power rather than just for his own personal gain, and nearly all of the money stayed in the country. At

the same time, he cracked down on middle-level corruption investigating large numbers of mid-level

officials and thus creating a good investment climate that forced the government to color inside the

lines. Although he ruled as a dictator, Park held his government to strict standards, and didnt use the

corruption strictly for personal enrichment.


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Corruption = Mexican Growth

Anti-Corruption Focus in Mexico is hurting econ growthCattan & Martin 2010 - Cattan is a reporter for Bloomberg News in Mexico City. Martin is a reporterfor the Chicago Tribune.

*Nacha Cattan & Eric Martin, Pena Nieto Anti-Corruption Focus Slows Mexican Economy Overhaul

Bloomberg, Jul 25, 2012, http://movies.netflix.com/WiPlayer?movieid=70159347&trkid=6081399]

Pena Nieto Anti-Corruption Focus Slows Mexican Economy Overhaul; Two weeks after Enrique Pena

Nieto won Mexicos July 1 presidential election, he unveiled his most pressing priorities for action. The

contrast with his pre- election agenda was unmistakable. His first order of business when Congress

convenes in September will be three bills to tackle corruption and increase transparency in government

and media, Pena Nieto wrote in a July 16 column in Reforma newspaper. Proposals to revamp the

economy will be offered in their own time, he said, without specifying when that will be. This marks a

change in emphasis from the campaign, when Pena Nieto pledged to open the state-run oil industry to

outside investment -- a measure he called his signature issue -- and overhaul tax and labor codes as

soon as possible, said Jorge Chabat at the Center for Economic Research and Teaching. I dont think any

of these economic reforms will be passed between now and December because the post-electoral

atmosphere wont permit it, said Chabat, a political science professor at the Mexico City-based

university. Its important to pass these laws in the beginning, because its when presidents have the

most power. Pena Nietos decision to push first for an anti-corruption panel, transparency

requirements for local authorities and a citizen watchdog to oversee government spending on the media

came amid protests that have brought thousands onto the streets of Mexico City each weekend since

the election. Many are supporters of runner-up Andres Manuel Lopez Obrador, 58, who has challenged

the results, alleging that local officials of the winners Institutional Revolutionary Party, or PRI,

embezzled public funds to buy millions of votes.

Corruption promotes societal cooperation

Ubeda and Duez, 2010---Profesors from the University of Tennessee, Knoxville and Harvard---[Francisco Ubeda and EdgarDuez, Researcher Finds Power and Corruption May Be Good For Society, Phys Org, 12-14-2010, http://phys.org/news/2010-12-power-

corruption-good-society.html]

They are familiar scenes: politicians bemoaning the death of family values only for extramarital affairs to be unveiled or politicians preaching

financial sacrifice while their expense accounts fatten up.Moral corruption and power asymmetries are pervasive in

human societies, butas it turns out,that may not be such a bad thing. Francisco Ubeda, an evolutionary biologyprofessor at the University of Tennessee, Knoxville, andEdgar Duez of Harvard University found that power and corruption may play a role in

maintaining overall societal cooperation. Using game theory, Ubeda and Duez looked at what causes individuals in society to cooperate

even though those in charge display some level of corruption. They developed a model that allows individuals who are responsible for

punishing noncooperators (e.g., law enforcers and government officials) to fail to cooperate themselves by acting in a corrupt manner. Theyalso considered the possibility that these law enforcers, by virtue of their positions, are able to sidestep punishment when they are caught

failing to cooperate. What they found is that the bulk of society cooperates because there are law enforcers forcing them to stay in line.

People tend to cooperate because they do not want to get punished. Even if the law enforcers consider themselves above the law and behave

in a corrupt way, overall societal cooperation is maintained as long as there is a small amount of power and corruption. However, if the law

enforcers have too much power and corruption runs rampant, overall societal cooperation breaks down. Ubeda explained how it works:

"Law enforcers often enjoy privileges that allow them to avoid the full force of the law when they breach it. Law enforcing results in the general

public abiding by the law. Thus law enforcers enjoy the benefits of a lawful society and are compensated for their law enforcing by being able to

dodge the law," he said. Theresearchers concluded that power and corruption benefit society; without law

enforcers, individuals have less incentive to cooperate and without power and corruption, law
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enforcers have less incentive to do their job. The researchers' findings have far-reaching implications. In biology, they mayhelp explain corrupt behaviors in social insects. In economics, the findings may aid in formulating policies by providing insights on how to

harness corruption to benefit society. In the field of psychology, the findings provide a justification to the correlation between power and

corruption observed in humans.


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Venezuelan Corruption Link turn

Attempts of ridding Venezuela of corruption fail and result in more corruption; history

provesCoronel 2008 He was a member of the Board of Directors of Petroleos de Venezuela from 1976-79,was president of Agrupacion Pro Calidad de Vida, and was the Venezuelan representative to

Transparency International from 1996 to 2000.

*By Gustavo Coronel, The Corruption of Democracy in Venezuela USA Today Magazine, March 2008,

http://www.cato.org/publications/commentary/corruption-democracy-venezuela]

Hugo Chavez was elected president of Venezuela in December 1998 on the strength of three main

promises: convening a Constituent Assembly to write a new constitution and improve the state, fighting

poverty and social exclusion, and eliminating corruption. Nine years later, it has become evident that

the Constituent Assembly primarily was a vehicle to destroy all existing political institutions and replace

them with a bureaucracy beholden to his wishes. Poverty and social exclusion remain as prominent asbefore, while the levels of government corruption are higher than ever.
http://www.cato.org/publications/commentary/corruption-democracy-venezuelahttp://www.cato.org/publications/commentary/corruption-democracy-venezuela


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Venezuelan Corruption = Growth

Corruption is good for the foreign market; Venezuela proves good for investors

Pagano 2013 - Michael S. Pagano is the Robert J. and Mary Ellen Darretta Endowed Chair in Finance at

the Villanova School of Business.*Micheal S. Pagano, When Corruption Helps the Bottom Line Stock Exchange of Caracas, January 28,

2013, http://dealbook.nytimes.com/2013/01/28/when-corruption-helps-the-bottom-line/]

Most investors would agree that less corruption and more transparency in financial markets are good

things. But in a contrarian way, a high degree of corruption in foreign markets can actually be beneficial.

And that may provide an interesting counterargument to recent enforcement actions. The fact that

large-scale corruption exists is not in dispute; in many foreign markets it is clearly caveat emptor.

Actions by the Justice Department and the Securities and Exchange Commission under the Foreign

Corrupt Practices Act in the United States are making front-page headlines almost on a weekly basis in

recent years.The Justice Department and the S.E.C. recently released guidance on the corrupt practices

act, a law that has become problematic for many global companies. And many other countries around

the world are also following suit with newly empowered regulatory agencies. In April 2011, Britain

passed the Bribery Act, a major compliance regulation, to go after corruption. Under this backdrop,

Professors Pankaj K. Jain of the University of Memphis, Emre Kuvvet of Texas A&M and I set out to

analyze just what effects corruption had on investment, cost of capital and market liquidity for

institutional investors. We examined corruption and its effect on financial markets at the national level

using data from 49 countries. Our finding that investing conditions are extremely favorable in Denmark,

one of the most transparent countries, makes logical sense. What is surprising is that the most corrupt

countries like Venezuela (which is at the very bottom of our list at No. 49) are actually better for

investors than moderately corrupt countries like Morocco or Mexico.

Venezuelan trade is high due to corruptionPagano, 1-28-Robert J. and Mary Ellen Darretta Endowed Chair in Finance at the Villanova School of Business.*Michael S. Pagano, When Corruption Helps the Bottom Line, New York Times, 1-28-13, http://dealbook.nytimes.com/2013/01/28/when-

corruption-helps-the-bottom-line/]

Most investors would agree that less corruption and more transparency in financial markets are good

things. But in a contrarian way, a high degree of corruption in foreign markets can actually be beneficial. Andthat may provide an interesting counterargument to recent enforcement actions. The fact that large-scale corruption exists is not in dispute; in

many foreign markets it is clearly caveat emptor. Actions by the Justice Department and the Securities and Exchange Commission under the

Foreign Corrupt Practices Act in the United States are making front-page headlines almost on a weekly basis in recent years. The Justice

Department and the S.E.C. recently released guidance on the corrupt practices act, a law that has become problematic for many global

companies. And many other countries around the world are also following suit with newly empowered regulatory agencies. In April 2011,

Britain passed the Bribery Act, a major compliance regulation, to go after corruption. Under this backdrop, Professors Pankaj K. Jain of the

University of Memphis, Emre Kuvvet of Texas A&M and I set out to analyze just what effects corruption had on investment, cost of capital and

market liquidity for institutional investors. We examined corruption and its effect on f inancial markets at the national level using data from 49

countries. Our finding that investing conditions are extremely favorable in Denmark, one of the most transparent countries, makes logicalsense. What is surprising is that the most corrupt countries like Venezuela (which is at the very bottom of our list at No. 49) are

actually better for investors than moderately corrupt countries like Morocco or Mexico . This finding points

to a perverse level playing field where potential investors in these extremely corrupt countries know who is in charge and

can thereby succeed and prosper. But in moderately corrupt countries, it is unclear who is in charge and how to play the game.Corruption is a result of several factors, including the increased pressure on investors and companies to compete for lucrative international

business opportunities. As noted in a 2011 working paper, the benefits obtained by bribing officials or engaging in corrupt behavior can be

quite tempting; it is estimated that the average return is 10 to 11 times the original bribe amount for 166 prominent cases in 20 countries. We

used several tools to help us quantify some of the effects of corruption on stock prices. Some of those included the corruption perceptions

index data from Transparency International; data from Ancerno that gives company transaction costs for foreign stocks traded by more than
http://dealbook.nytimes.com/2013/01/28/when-corruption-helps-the-bottom-line/http://dealbook.nytimes.com/2013/01/28/when-corruption-helps-the-bottom-line/


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700 institutions in the home markets of 49 countries; and I.M.F. data on foreign portfolio investment flows in all 49 countries. Based on these

data, it was clear that corruption in the 49 countries that were studied directly affected their financial markets. Corruption directly affected

stock liquidity (making it hard to quickly buy or sell a particular stock or bond), the cost of buying and selling stocks and the trading costs of

stocks. Corruption also affects the amount of foreign investment in a country as a percentage of gross domestic product, and the cost of

financing corporate operations within a certain country. We discovered that, on average, corruption can reduce foreign equity investments by

70 percent, raise trading costs by 0.8 percentage points (that is, 80 basis points) and increase the cost of capital by up to 8.63 percentage

points. The presence of corruption also makes it hard for outsiders to value a security properly. Higher levels of corruption typically lead to

greater investor uncertainty and a wider gulf between what insiders and outsiders know about the value of a markets stocks and bonds. An

answer to the problem, however, may lie in investing in education rather than in regulation. Our study also found that corruption was inverselyrelated to the level of education in a country. So, more education typically relates to less corruption, and a country that wants to reduce

corruption over the long run should promote and invest in education.In the meantime, what is an investor to do? Because of the perverse

level playing field that makes moderately corrupt countries unattractive, large investors looking at foreign markets

might prefer to invest in the most corrupt nations (as well as the most transparent). There are corporate costs to engagingin corruption, however. Our study also examined 27 publicly traded companies that ran afoul of the Foreign Corrupt Practices Act, including

I.B.M., Chevron and Siemens. We discovered that after each company was fined, its average trading costs and cost of capital were higher.

These higher costs translate into a lower stock price for those firms that have been penalized under anticorruption laws. So should investors

ask for more regulatory enforcement of corrupt foreign exchanges? Of course, but the incentives for doing what is morally right and for what

actually might make a profit may not be so clearly aligned.Maybe governments role in promoting education might be another, more effective

way to realign these incentives so that the world can be more

transparent and less corrupt in the long run.


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Squo Solves

Corruption has dropped in Latin America and will continue to

Winter 2012 Winter is Chief Correspondent, Reuters Brazil from Sao Paulo and was previously the

foreign editor for USA Today*Brian Winter, Corruption drops slightly in Latin America survey Reuters, Thu Jun 14, 2012,

http://www.reuters.com/article/2012/06/14/latinamerica-corruption-survey-idUSL1E8HD2PF20120614]

BRASILIA, June 14 (Reuters) - While corruption remains a severe problem in Latin America, regional

executives believe it has abated slightly, thanks to more stringent corporate ethics rules and

enforcement of anti-graft laws, according to a survey released on Thursday. About 51 percent of

respondents believed they had recently lost business to competitors who made illicit payments, the

survey of 402 business leaders in Latin America found. That's down from 57 percent in a previous survey

in 2008. About 25 percent of respondents said anti-graft laws in their country were effective, up from 15

percent in 2008. Chile and Uruguay were perceived to be the least corrupt of Latin American countries.

Venezuela was seen as the most corrupt, followed by Bolivia, Argentina and Mexico. Brazil, the region's

biggest economy, was roughly in the middle of the pack. "These results indicate a general view that

people are less likely to get away with these crimes now," said James Tillen of Miller & Chevalier, one of

two U.S.-based law firms that coordinated the survey. Three-quarters of respondents said they were

aware of an offender being prosecuted for making or receiving illicit payments, up from 69 percent in

the previous survey. The survey said more companies in the region are taking internal steps to prevent

corruption - 85 percent of respondents said theirs were, compared with 76 percent in 2008. Tillen said

increased enforcement in recent years of the U.S. Foreign Corrupt Practices Act, which makes it illegal

for U.S. companies to pay bribes abroad, may have had a "snowball effect" by leading multinational

companies in Latin America to adopt tougher standards. Several high-profile corruption cases have

rocked the region recently. Wal-Mart Stores Inc is investigating bribery allegations at its Mexican unit

and has initiated a global review of its anti-corruption compliance program. Latin Americans are also

demanding cleaner government from their leaders. A wave of prosperity has pulled tens of millions ofpeople into the middle class over the past decade, and polls show that corruption has become a more

important issue to them as poverty and unemployment decline.
http://www.reuters.com/article/2012/06/14/latinamerica-corruption-survey-idUSL1E8HD2PF20120614http://www.reuters.com/article/2012/06/14/latinamerica-corruption-survey-idUSL1E8HD2PF20120614


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Corruption bad


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Mexican Economy

Government corruption in Mexico is common and costing billions

Zabludovsky, 2013-24 Horas Anchor---*Karla Zabludovsky, Starting to Come to Light, New York Times, 6-23-13,http://www.nytimes.com/2013/06/24/world/americas/official-corruption-in-mexico-once-rarely-exposed-is-starting-to-come-to-light.html?pagewanted=all&_r=0]

MEXICO CITY Andrs Granier has a sumptuous wardrobe and lifestyle. He has bragged about owning 400 pairs of shoes, 300 suits and 1,000

shirts, collected from luxury stores in New York and Los Angeles. His purchases barely fit in his several properties, scattered throughout Mexico

and abroad. Enlarge This Image Bernardo Montoya/Reuters Tapes of Andrs Granier, center, the former governor of Tabasco State,

boasting of his lifestyle were leaked to a radio station. America Rocio/Associated Press Cash that was found on a property linked to Jos

Manuel Saiz, Mr. Graniers treasurer. Mr. Saiz was arrested this month.A tape recording of Mr. Graniers boasts, making him sound like a

highflying corporate executive, was leaked to a local radio station last month. But his job title, until December, was governor of a midsize

southeastern Mexican state, a position that currently pays about $92,000 a year after taxes.We go to Fifth Avenue and buy a pair of shoes;

$600, Mr. Granier is heard saying about one of his trips abroad. I took clothes to Miami, I took clothes to Cancn, I took clothes to my house,

and I have leftovers, he added, saying, Im going to auction them off. (The day after the recording was made public, he said that he had been

inebriated while making those statements in October.) But just as eye-opening as the extravagances of a public official now under

investigation after Mr. Graniers successr discvered that abut $190 millin in state funds was

unaccounted for, the state government said this month is that they came to light at all in a country where state and local

corruptin, a serius drag n Mexics develpment, run deep and are rarely exposed. The case of Mr. Granier, whowas taken into custody on June 14 at a Mexico City hospital where he is being treated for a heart ailment, is just the latest among several

former governors and public officials who have recently found themselves under investigation or facing public scorn. Watchdog groups are

gaining strength, opposition parties are challenging and exposing the faults of the status quo, and social and traditional news media

organizations are increasingly seeking to hold officials accountable.There will be more of these because the issue has taken off, said

Ricardo Corona, a public finance expert at the Mexican Institute for Competitiveness, a research group in Mexico City. There is encouragement

on the issues of transparency, accountability, access to information.Mr. Graniers case is one of the more closely followed political

spectacles here in recent years. By January, when the new government in his state, Tabasco, found holes in the budget, Mr. Granier, 65, had

retreated into obscurity. This month, after public shock and outrage over the recording reached a fever pitch, he suddenly resurfaced on

television, saying he was in Miami.Im going back to Mexico, he declared in an interview on one of Mexicos most-watched morning

shows, Primero Noticias. I dont owe absolutely anything. Upon his arrival at the airport in the capital the following day, a chaotic news

media swarm engulfed Mr. Granier at one point he stumbled before the cameras before he was whisked away in a white S.U.V., with

camera crews on motorcycles giving chase.Three days later, the Tabasco state attorneys office issued an arraignment order for Mr. Granier

on suspicion of embezzlement and improper exercise of public service. His treasurer, Jos Manuel Saiz, already had been

arrested this month on suspicion of embezzlement as he tried to cross the border into the United States, after boxes containingnearly $7 million in unexplained cash were discovered on a property linked to him. A decade ago, such suspicious accounting would have

most likely been kept under wraps, as Mexican officials tended to protect one another and the public took their malfeasance for granted.

During the uninterrupted 71-year rule of the Institutional Revolutionary Party, or PRI, governors, who often secured their appointments based

on friendly ties with the autocratic presidents, were almost expected to pillage state treasuries. When the party lost the 2000 presidential

election, it left a political vacuum across the states. Governors around the country acquired unprecedented autonomy and almost no oversight,

said Alfonso Zrate, the president of Grupo Consultor Interdisciplinario, a political consulting firm in Mexico. State debt rose to $30

billion in 2012 from about $15 billion in 2008, according to the Ministry of Finance and Public Credit. Accounting for inflation,

that was a 70.4 percent increase, according to an article in the online publication Animal Poltico by Marco Cancino, a politicalanalyst in Mexico City. Governments have reported scant details of how they have spent the money from these loans. But with governors

from opposing political parties succeeding one another and doing away with the unspoken pact of the PRI years, in which incoming leaders

protected departing ones, a system of checks and balances some have called it political retribution is emerging. Freedom of

information laws, recent legislative overhauls demanding more accountability from state governments and an increasingly technologically

engaged society have been more successful at preventing murky finances from going unquestioned. As a result, tales of disgraced former

governors are becoming a staple of the news here, and are part of what Mr. Zrate calls an incipient democracy. In 2011, the federal

attorney generals office opened an investigation into a $3 billion debt in the state of Coahuila, acquired mostly during the administration ofHumberto Moreira, a former president of the PRI, which recovered the presidency in December. The former governor of the state of

Aguascalientes, Luis Armando Reynoso, is being investigated over improper exercise of public service, news

organizations have reported. Last year, Mario Ernesto Villanueva Madrid, the former governor of the state of Quintana

Roo who was extradited to the United States in 2010, pleaded guilty to conspiring to launder millions of dollars in

bribes he received from the powerful Jurez drug organization, to ensure that its cocaine moved safely through hisstate, undisturbed by law enforcement.Inroads in transparency, however, have yet to change the culture and mentality of El que no tranza,

no avanza, or He who does notcheat, does not get ahead, a popular motto here. And these victories have yet to transform the countrys

image abroad: Mexico fell in Transparency Internationals corruption perception index to 105th place in 2012 from 57th in 2002, with a lower

ranking indicating that the country is seen as more corrupt.We still dont have accountability, said Mr. Cancino, the political analyst, who


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warned that progress in transparency practices at the federal level would slowly make their way down to the local and state levels. There are

still 32 battles that we have to wage, he said, referring to Mexicos 31 states and one federal district. Small gains in transparency, seen

through scandals like the one enveloping Mr. Granier, have not translated into justice served, experts say. Governors are investigated but rarely

charged.We know what is going on, said Sergio Aguayo, a political analyst at the Colegio de Mxico. But no measures are being taken.

Mexicans who are active on Twitter discuss these scandals for days and sometimes weeks, shaming politicians and pressing traditional news

media to cover them extensively. But political analysts argue that there are no effective mechanisms yet to translate citizen participation into

structural change.What do we do so that society goes from indignation to action? Mr. Cancino asked. In the meantime, former

politicians who endure public scrutiny and a dose of humiliation often come out of these scandals largely unscathed. In April, the newspaper

Reforma reported that Mr. Moreira, the repudiated former Coahuila governor, was living with his family in an upscale neighborhood inBarcelona, Spain, while attending a local university.

Mexico needs to save money-GDP is and has been lowTrading Economics, 7-17 ---[Trading Economics, Mexico Government Budget, tradingeconomics.com, 7-17-13,http://www.tradingeconomics.com/mexico/government-budget]Mexico recorded a Government Budget deficit equal to 0.60 percent of the country's Gross Domestic

Product in 2012. Government Budget in Mexico is reported by the Secretaria de Hacienda y Credito Publico. Mexico Government

Budget averaged -1.01 Percent of GDP from 1990 until 2012 , reaching an all time high of 0.81 Percent of GDP inDecember of 1992 and a record low of -3.11 Percent of GDP in December of 2009. Government Budget is an itemized accounting of the

payments received by government (taxes and other fees) and the payments made by government (purchases and transfer payments). A budget

deficit occurs when an government spends more money than it takes in. The opposite of a budget deficit is a budget surplus. This page includes

a chart with historical data for Mexico Government Budget.

Mexics mderate crruptin des nt benefit its ecnmyPagano, 1-28-Robert J. and Mary Ellen Darretta Endowed Chair in Finance at the Villanova School of Business---*Michael S. Pagano, WhenCorruption Helps the Bottom Line, New York Times, 1-28-13, http://dealbook.nytimes.com/2013/01/28/when-corruption-helps-the-bottom-

line/]Most investors would agree that less corruption and more transparency in financial markets are good

things. But in a contrarian way, a high degree of corruption in foreign markets can actually be beneficial. Andthat may provide an interesting counterargument to recent enforcement actions. The fact that large-scale corruption exists is not in dispute; in

many foreign markets it is clearly caveat emptor. Actions by the Justice Department and the Securities and Exchange Commission under the

Foreign Corrupt Practices Act in the United States are making front-page headlines almost on a weekly basis in recent years. The Justice

Department and the S.E.C. recently released guidance on the corrupt practices act, a law that has become problematic for many global

companies. And many other countries around the world are also following suit with newly empowered regulatory agencies. In April 2011,Britain passed the Bribery Act, a major compliance regulation, to go after corruption. Under this backdrop, Professors Pankaj K. Jain of the

University of Memphis, Emre Kuvvet of Texas A&M and I set out to analyze just what effects corruption had on investment, cost of capital and

market liquidity for institutional investors. We examined corruption and its effect on f inancial markets at the national level using data from 49

countries. Our finding that investing conditions are extremely favorable in Denmark, one of the most transparent countries, makes logical

sense. What is surprising is that the most corrupt countries like Venezuela (which is at the very bottom of our list at No. 49) are

actually better for investors than moderately corrupt countries like Morocco or Mexico . This finding pointsto a perverse level playing field where potential investors in these extremely corrupt countries know who is in charge and can thereby

succeed and prosper. Butin moderately corrupt countries, it is unclear who is in charge and how to play the

game. Corruption is a result of several factors, including the increased pressure on investors and companies to compete for lucrativeinternational business opportunities. As noted in a 2011 working paper, the benefits obtained by bribing officials or engaging in corrupt

behavior can be quite tempting; it is estimated that the average return is 10 to 11 times the original bribe amount for 166 prominent cases in

20 countries. We used several tools to help us quantify some of the effects of corruption on stock prices. Some of those included the

corruption perceptions index data from Transparency International; data from Ancerno that gives company transaction costs for foreign stocks

traded by more than 700 institutions in the home markets of 49 countries; and I.M.F. data on foreign portfolio investment flows in all 49

countries. Based on these data, it was clear that corruption in the 49 countries that were studied directly affected their financial markets.

Corruption directly affected stock liquidity (making it hard to quickly buy or sell a particular stock or bond), the cost of buying and selling stocks

and the trading costs of stocks. Corruption also affects the amount of foreign investment in a country as a percentage of gross domestic

product, and the cost of financing corporate operations within a certain country. We discovered that, on average, corruption can reduce foreign

equity investments by 70 percent, raise trading costs by 0.8 percentage points (that is, 80 basis points) and increase the cost of capital by up to

8.63 percentage points. The presence of corruption also makes it hard for outsiders to value a security properly. Higher levels of corruption

typically lead to greater investor uncertainty and a wider gulf between what insiders and outsiders know about the value of a markets stocks

and bonds. An answer to the problem, however, may lie in investing in education rather than in regulation. Our study also found that

corruption was inversely related to the level of education in a country. So, more education typically relates to less corruption, and a country

that wants to reduce corruption over the long run should promote and invest in education. In the meantime, what is an investor to do?


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Because ofthe perverse level playing field that makes moderately corruptcountries unattractive,large

investors looking at foreign markets might prefer to invest in the most corrupt nations (as well as the mosttransparent). There are corporate costs to engaging in corruption, however. Our study also examined 27 publicly traded companies that ran

afoul of the Foreign Corrupt Practices Act, including I.B.M., Chevron and Siemens. We discovered that after each company was fined, its

average trading costs and cost of capital were higher. These higher costs translate into a lower stock price for those firms that have been

penalized under anticorruption laws. So should investors ask for more regulatory enforcement of corrupt foreign exchanges? Of course, but

the incentives for doing what is morally right and for what actually might make a profit may not be so clearly aligned. Maybe governments

role in promoting education might be another, more effective way to realign these incentives so that the world can be moretransparent and less corrupt in the long run.


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Venezuela Oil

Oil revenues are high but government corruption takes awayCoronel, 2008-President of Agrupacion Pro Calidad de Vida, Venezuelan representative to Transparency International from 1996-2000.Member of the board of directors of Petroleos de Venezuela from 1976-79

*Gustavo Coronel, The Corruption of Democracy in Venezuela, Cato Institute, March 2008,http://www.cato.org/publications/commentary/corruption-democracy-venezuela]

In the nine years since Chavez came to power, an estimated $300,000,000,000 of oil income has entered the

national treasury. The exact number is uncertain due to the poor transparency of the government accounts, and because the nationalpetroleum company no longer presents financial results to the U.S. Securities Exchange Commission or to the Venezuelan people. In parallel,

during Chavezs tenure, national debt has increased from $22,000,000,000 to about $70,000,000,000. Together with income tax revenues, the

total income of Venezuela during Chavezs presidency has been approximately $700,000,000,000. This formidable amount of money is nowhere

to be seen in terms of public works or effective health and education programs. Three parallel budgets existedtotaling more than

$80,000,000,000in 2007: the formal one, for some $55,000,000,000 (including additional amounts), approved without discussion by t he

submissive National Assembly; a second one, amounting to $10,000,000,000, derived from the international monetary reserves taken from the

Venezuelan Central Bank, in violation of the laws of the country; and a third, in the amount of $15,000,000,000, built from the funds siphoned

out of Petroleos de Venezuela, monies which were required for investment and maintenance of the petroleum industry. None of these budgets

are discussed publicly or subject to accountability. Irregularities abound in the management of public funds: more than

$22,500,000,000 in dollar transfers have been made to foreign accounts, maintains the Venezuelan Central Bank,

and at least half of that money remains unaccounted for . Jose Guerra, a former Central Bank executive, indicates that

some ofthis mney has been used by Chavez t buy plitical lyalties in the regin and some has beendonated to Cuba and Bolivia, among other countries. According to a Jan. 31, 2006, story in the Financial Times, a select group of Venezuelan

bankers, including those at Banco Occidental de Descuento and Fondo Comun, has profited from the acquisition of Argentinean bonds by the

Venezuelan government, at the expense of the national treasury. The bonds are bought at the official rate of exchange and sold at black market

rates, at considerable profit. Venezuelan journalist Carlos Ball estimates that bankers loyal to the government could have profited by up to

$600,000,000 as a result of the differential between the official and the black market rates. Former Chavez Minister of Finance Jose Rojas has

predicted that the loss of autonomy of the Venezuelan Central Bank and the disorder in the management of the financial resources on the part

of the government will lead to a significant financial crisis.The nine years f Chavezs presidency have led t the

highest levels of government corruption ever experienced in Venezuela. The main reasons have been: the record oil incomeobtained by the nation, money going directly into Chavezs pockets; a mediocre management team working without transparency or

accountability; the ideological predilections of Chavez, which have led him to try to play a messianic role in Latin America, and even world

affairs; and the policies of handouts put in place by Chavez to keep the Venezuelan masses politically loyal.

Corruption causes the downfall of oil companiesCoronel, 2008-President of Agrupacion Pro Calidad de Vida, Venezuelan representative to Transparency International from 1996-2000.Member of the board of directors of Petroleos de Venezuela from 1976-79

*Gustavo Coronel, The Corruption of Democracy in Venezuela, Cato Institute, March 2008,

http://www.cato.org/publications/commentary/corruption-democracy-venezuela]

High levels of mismanagement at the state-owned petroleum company, Petroleos de Venezuela. Corruption heretakes many shapes. It includes the naming of six presidents and boards in seven years, in an effort to control the company politically. This finally

was accomplished by naming the Minister of Energy and Petroleum president of the company, in violation of good management practice, since

he now supervises himself. As aresult, oil production has declined by some 800,000 barrels per day during the

last decade. In a recent public hearing, Luis Vierma, the firms Vice President for Exploration and Production, admitted giving an oil welldrilling contract for some $20,000,000 to a company with only three employees and no rigs.


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Cuban Growth

Crruptin inhibit Cubas ecnmic activity

Index of Economic Freedom, 2013*Index of Economic Freedom, Cuba Economy, heritage.org, 2013, http://www.heritage.org/index/country/cuba]Cubas ecnmic freedm score is 28.5, making its economy ne f the wrlds least free. Its overall score is 0.2 pointhigher than last year, with a notable decline in monetary freedom counterbalanced by gains in freedom from corruption and fiscal freedom.

Cuba is ranked least free of 29 countries in the South and Central America/Caribbean region, and its overall score is significantly lower than the

regional average.Cuba scores far below world averages in most areas of economic freedom, and its economy remains one of the worlds most

repressed. The foundations of economic freedom are particularly weak in the absence of an independent and fair

judiciary. No courts are free of political interference, and pervasive corruption affects many aspects of economic

activity. As the largest source of employment, the public sector accounts for more than 80 percent of all jobs. A watered-down reformpackage endorsed by the Cuban Communist Party in April 2011 promised to trim the number of state workers and allow restricted self-

employment in the non-public sector, but many details of the reform are obscure and little progress has been observed. The private sector is

severely constrained by heavy regulations and tight state controls. Open-market policies are not in place to spur growth in trade and

investment, and the lack of competition stifles productivity growth.
http://www.heritage.org/index/country/cubahttp://www.heritage.org/index/country/cuba


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Heg Bad


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Heg = Econ Collapse

Hegemony kills trade, causes protectionism and arms race

Lobell 09(Steven E., Professor of Political Science at Utah University, Excerpt from Challenge of Hegemony, Published by the University of Michigan Press,Written in December, 2009, pg. 154-155,Elibrary) JA

In encountering new and old competitors on disparate fronts, free traders will respond to these external

pressures by pushing the government to cooperate with liberal contenders and perhaps even imperial

contenders. The domestic outcome of cooperation will ratchet-up the strength of efficient industry, the

financial sector, consumers, and fiscal conservatives. Cooperation entails reduced protectionism,

elimination of exchange controls, participation in NGOs and IGOs, territorial concessions, membership in

collective security arrangements, and the negotiation of arms limitation agreements. Economy-minded

free traders will favor aiding in the rise of liberal contenders, thereby expediting the hegemns cost-

saving retreat from the locale. In doing so, the hegemon will retain access to its traditional interests in

the locale without bearing any of the economic, political, or military costs associated with regional

hegemony. Free traders will resist punishing states, even imperial competitors, because that will

bolster the political clout ofeconomic nationalists who will push for a more hard-line grand strategy.Punishing liberal contenders (even in a vital or strategic locale) will create the false illusion of

incompatibility that can intensify into a self-defeating hostility spiral that disrupts trade, results in

protectionism and beggar-thy-neighbor economic policies, and contributes to an arms race.

Hegemony will inevitably cause economic collapse, fascism, and coercion. The only

way to solve is through transnationalism

Martins and Thompson 07(Carlos Eduardo Martins is research director of the UNESCO-UNU Network on the Global Economy andSustainable Development and an associate researcher at the Laboratory of Public Policy of the State University of Rio de Janeiro. Timothy Thompson is a Boren

Research Fellow at the Institute of International Education, and teaching fellow at Boston College. "The Impasses of U.S. Hegemony: Perspectives for the Twenty-

first Century". Published by SAGE publications in their journal Latin American Perspectives Vol 34 No. 1. Written in January of 2007. jstor) JA

The trajectories ofU.S. hegemony and the modern world system in the coming decades should be

understood in terms ofthese three long-run tendencies. I would argue that the expansion phase of a

new Kondratieff cycle has been developing in the United States since 1994. This expansion will lack the

brilliance of the phase that developed in the postwar period. It will be shorter and will promote lower

rates of growth, since it will be affected by two downward trends: civilizational crisis and the B-phase of

the systemic cycle. Within this new phase of expansion, the financial and ideological foundations of

U.S. hegemony will deteriorate, and the United States will lose the leadership position that it

exercised in the world economy from 1980 to 1990, when it was surpassed in dynamism only by East

Asia. The world will enter a new phase of systemic chaos, and no nation-state will be able to reconstruct

the world-system on new hegemonic bases. A bifurcation will occur: on one hand, there will be forces

attempting to restore historical capitalism to U.S. imperialism via the cohesion of the principal centers ofglobal wealth, and, on the other hand, there will be forces seeking to overcome the modern world-

system through a posthegemonic system. This confrontation will occur not only among nation-states

(although, in part, it may be oriented in terms of them) but also transnationally. The transnational

dimension, aimed at creating new forms of power to direct both human existence and the planet, has

already manifested itself, for example, in mass demonstrations against U.S. imperialism and the

oligarchic coordination of the world economy and in attempts to organize social movements on a global

scale, most notably in the World Social Forum. If transnationalism succeeds, humanity will be able to

traverse the systemic chaos without succumbing to a cataclysmic war. Transnational forces will create
http://site.ebrary.com.proxy.lib.umich.edu/lib/umich/docDetail.action?docID=10356833http://site.ebrary.com.proxy.lib.umich.edu/lib/umich/docDetail.action?docID=10356833


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"drive belts" across nation-states, circumventing global oligarchies. But if nationalism succeeds, it will

be difficult to avoid a move toward fascism, barbarism, and the use of the state as an instrument of

coercion.


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Heg = War

U.S hegemony will create conflict and war

Monteiro 12( Nuno P., Assistant Professor of Political Science at Yale University. Exerpt from "Why Unipolarity is not Peaceful". Published byInternational Security, Winter 2011/2012. PROJECT MUSE) JA

In this article, I provide a theory of unipolarity that focuses on the issue of unipolar peacefulness rather

than durability. I argue that unipolarity creates significant conflict-producing mechanisms that are

likely to involve the unipole itself. Rather than assess the relative peacefulness of unipolarity vis--vis

bipolar or multipolar systems, I identify causal pathways to war that are characteristic of a unipolar

system and that have not been developed in the extant literature. To be sure, I do not question the

impossibility of great power war in a unipolar world. Instead, I show how unipolar systems provide

incentives for two other types ofwar: those pitting the sole great power against another state and

those involving exclusively other states. In addition, I show that the type of conflict that occurs in a

unipolar world depends on the strategy of the sole great power, of which there are three. The first

twodefensive and offensive dominancewill lead to conflicts pitting the sole great power againstother states. The thirddisengagementwill lead to conflicts among other states. Furthermore,

whereas the unipole is likely to enter unipolarity implementing a dominance strategy, over time it is

possible that it will shift to disengagement.


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Heg = China War

Continued U.S Hegemony will inevitably cause U.S - China War

Thompson 12(William R., professor of political science and Kinesiology at Indiana University. Excerpt from "Correspondence: Decline andRetrenchmentPeril or Promise?", Published by International Security Spring of 2012. project muse) JA

All great powers and their relative declines/transitions can be compared only with careful

qualifications. Some powers are more important than others, and because they are more important,

their transitions have been considerably less peaceful in the past. [End Page 196] Yet perhaps that is

the problem. These conflicts were in the past, and something may have changed fundamentally.

One possibility is that Europe harbored a string of territorially expansive political-military actors that no

longer exist. Europe has played itself out as a cockpit of political-military bids for regional hegemony,

but then Asia offers some prospects for both regional type III hegemony struggles (China-India and

China and Russia) and a type I conflict (China-United States).

Continued U.S hegemony will inevitably cause U.S - China war (This town ain't big

enough for the two of us)Layne 12( Christopher, professor of international affairs at the Bush School of Government and Public Service at Texas A&M University and Robert M. GatesChair in National Security. Excerpt from "This Time Its Real: The End of Unipolarity and the Pax Americana". Published by International Studies Quarterly, March

2012. wiley online library) JA

Great power politics is about power. Rules and institutions do not exist in vacuum. Rather, they reflect

the distribution of power in the international system. In international politics, who rules makes the

rules. The post-World War II international order is an American order that privileges the United States

interests. Even the discourse of liberal order cannot conceal this fact. This is why the notion that

China can be constrained by integrating into the post-1945 international order lacks credulity. For US

scholars and policymakers alike, Chinas successful integration hingeson Beijings willingness to accept

the Pax Americanas institutions, rules, and norms. In other words, China must accept playing second

fiddle to the United States. Revealingly, Ikenberry makes clear this expectation when he says that the

deal the United States should propose to China is for Washington to accommodate a rising China byoffering it status and position within the regional order in return for Beijings acceptance and

accommodation of Washingtons core interests, which include remaining a dominant security provider

within East Asia (Ikenberry 2011:356). It is easy to see why the United States would want to cut such a

deal but it is hard to see whats in it for China. American hegemony is waning and China is ascending,

and there is zero reason for China to accept this bargain because it aims to be the hegemon in its own

region. The unfolding Sino-American rivalry in East Asia can be seen as an example of Dodge City

syndrome(in American Western movies, one gunslinger says to the other: This twn aint big enugh

for both of us) or as a geopolitical example of Newtonian physics (two hegemons cannot occupy the

same region at the same time). From either perspective, the dangers should be obvious: unless the

United States is willing t accept Chinas ascendancy in East (and Southeast) Asia, Washington and

Beijing are on a collision course.

U.S Hegemony will cause China War

Layne 08(Christopher Layne, professor of international affairs at the Bush School of Government and Public Service at Texas A&M Unive rsity and Robert M.Gates Chair in National Security. Excerpt from "China's Challenge to U.S He gemony". Published by Current History January 2008.

http://acme.highpoint.edu/~msetzler/IR/IRreadingsbank/chinauscontain.ch08.6.pdf)

Chinas rise affects the United States because of what international relations scholars call the power

transition effect: Throughout the history of the modern international state system, ascending powers
http://onlinelibrary.wiley.com.proxy.lib.umich.edu/doi/10.1111/j.1468-2478.2011.00704.x/full#b22http://onlinelibrary.wiley.com.proxy.lib.umich.edu/doi/10.1111/j.1468-2478.2011.00704.x/full#b22http://acme.highpoint.edu/~msetzler/IR/IRreadingsbank/chinauscontain.ch08.6.pdfhttp://acme.highpoint.edu/~msetzler/IR/IRreadingsbank/chinauscontain.ch08.6.pdfhttp://onlinelibrary.wiley.com.proxy.lib.umich.edu/doi/10.1111/j.1468-2478.2011.00704.x/full#b22


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have always challenged the position of the dominant (hegemonic) power in the international system

and these challenges have usually culminated in war.Notwithstanding Beijings talk about a peaceful

rise, an ascending China inevitably will challenge the geopolitical equilibrium in East Asia. The

doctrine of peaceful rise thus is a reassurance strategy employed by Beijing in an attempt to allay

others fears of growing Chinese power and to forestall the United States from acting preventively

during the dangerous transition period when China is catching up to the United States. Does this mean

that the United States and China are on a collision course that will lead to a war in the next decade or

two? Not necessarily. What happens in Sino-American relations largely depends on what strategy

Washington chooses to adopt toward China. If the United States tries to maintain its current

dominance in East Asia, Sino-American conflict is virtually certain, because U.S. grand strategy has

incorporated the logic of anticipatory violence as an instrument for maintaining American primacy.

For a declining hegemon, strangling the baby in the crib by attacking a rising challenger

preventivelythat is, while the hegemon still holds the upper hand militarilyhas always been a

tempting strategic option.

U.S attempts to maintain it's hegemony will spark U.S China nuclear WarEtzioni 7/2 *most recent impact evidence( Amitai Etzioni, professor of International Relations at George WashingotnUniversity. Excerpt from his article "Preparing to Go to War with China". Publihsed by the Huffington Post on July 2, 2013 http://www.huffingtonpost.com/amitai-

etzioni/preparing-to-go-to-war-wi_b_3533398.html ) JAOfficials emphasize that ASB is not directed at any one nation. However, no country has invested nearly

as much in A2/AD as China and few international environments are more contested -- than the waters

of the Asia-Pacific. Hence, while in the past the U.S. could send in a couple aircraft carriers as a credible

display of force, as it did in 1996 when the Chinese conducted a series of missile tests and military

exercises in the Strait of Taiwan, in the not-so-distant future Chinese anti-ship missiles could deny U.S.

access to the region. Thus, it is not surprising that one senior Navy official overseeing modernization

efforts stated that, "Air-Sea Battle is all about convincing the Chinese that we will win this

competition." Although much of the ASB remains classified, in May of this year the Navy released an

unclassified summary that illuminates how the concept is beginning to shape the military's plans andacquisitions. In 2011, the Pentagon set up the Air-Sea Battle Office to coordinate investments, organize

war games, and incorporate the ASB concept in training and education across all four Services. A

Congressional Research Service report notes that "the Air-Sea Battle concept has prompted Navy

officials to make significant shifts in the service's FY2014-FY2018 budget plan, including new

investments in ASW, electronic attack and electronic warfare, cyber warfare, the F-35 Joint Strike Fighter

(JSF), the P-8A maritime patrol aircraft, and the Broad Area Maritime Surveillance (BAMS) UAV

[Unmanned Aerial Vehicle]." Critics ofAir-Sea Battle warn that it is inherently escalatory and could

even precipitate a nuclear war. Not only will the U.S.'s development of ASB likely accelerate China's

expansion of its nuclear, cyber, and space weapons programs, but according to Joshua Rovner of the

U.S. Naval War College, the early and deep inland strikes on enemy territory envisioned by the concept

could be mistakenly perceived by the Chinese as preemptive attempts to take out its nuclear weapons,thus cornering them into "a terrible use-it-or-lose-it dilemma." Hence, some call for "merely" imposing a

blockade on China along the first island chain (which stretches from Japan to Taiwan and through the

Philippines) in order to defeat an aggressive China without risking a nuclear war.
http://www.huffingtonpost.com/amitai-etzioni/preparing-to-go-to-war-wi_b_3533398.htmlhttp://www.huffingtonpost.com/amitai-etzioni/preparing-to-go-to-war-wi_b_3533398.htmlhttp://www.huffingtonpost.com/amitai-etzioni/preparing-to-go-to-war-wi_b_3533398.htmlhttp://www.huffingtonpost.com/amitai-etzioni/preparing-to-go-to-war-wi_b_3533398.html


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U.S hegemony will cause U.S China war which escalates to global war

Hareshan 7/16( Mihai Hareshan, writer for the nine o'clock which is a news website that provides global information on multiple differentinternational issues. Based in Romania. Excerpt from "US-China war plans". Published by nine o'clock news on July 16, 2013 at 9:00 PM

http://www.nineoclock.ro/us-china-war-plans/ ) JA

According to the theory of international relations, the (global) systematic order usually changes

through a generalised war named hegemony. This war usually erupts when the leader of the system

in the present situation the USA is in danger of being replaced by the direct challenger, which today isChina. At stake in this fight is taking the systemic leadership and founding a new order, profitable to the

new hegemon, i.e. the eventual winner. As it is known, following an exponential economic increase for

the last three decades, China now ranks second systemically, from an economic point of view if we do

not see the EU as a sole political entity and trustworthy forecasts show that it will also outpace the

USA in the coming years (in terms of economic volume, not as GDP per capita). It is equally known,

especially after a recent book written by Joseph Nye Jr., that it is not only the GDP which gives the

measure of a states power. HHHHHHHHHAnd, from this perspective, the USA seems to be

irreplaceable at the top of the system of states for the next generation. Historic practice shows that, in

conditions of a competition between hegemon and the main contender being installed at the top of

the system, with the power gap between them narrowing gradually, the possibility of a hegemonic war

is very high and the conflict can start from a calculation (the kind of: it is the last moment when thechallenger can be stopped, or the hegemon can be defeated) or by accident . This period of tension

induced by the competition at the peak of the system is reflected through a succession of crises that

involve these actors or their allies, as well as through an arms race that grows incessantly. From this

last perspective, one enters what is called in theorythe prisoners dilemma which states that

perceptions, rather than realities, hidden by the absence of transparency, play the essential role in the

major decisions of peace and war. Many experts take into consideration the fact that today the system

undergoes such a period of uncertainty, marked by power crises and competition between the big

actors of international relations.
http://www.nineoclock.ro/us-china-war-plans/http://www.nineoclock.ro/us-china-war-plans/


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Heg = Terrorism

U.S hegemony causes Muslims to backlash against the United States (a lil shady)

Blaydes and Linzer 12( Lisa Blaydes and Drew A. Linzer. Blaydes is an assistant professor of political science at Stanford University. Linzer is anassistant professor of political science at Emory University, and a Visiting Assistant Professor at the Stanford University Center on Democracy, Development, and the

Rule of Law. Excerpt from " Elite Competition, Religiosity, and Anti-Americanism in the Islamic World". Published by The American Political Science Review in May of

2012. Proquest) JABecause of the political, economic, and cultural hegemony of the United States, large segments of

Muslim society are receptive to anti-American rhetoric--from whichever side it comes. Opinion surveys

indicate that most Muslims believe Americans are not religious enough andthat the religious beliefs

that they do hold drive the United States to make bad decisions in the world (Kohut and Stokes 2006,

93). Although many individuals across the Muslim world enjoy American movies, television, and music,

they also view globalization and the spreading influence of American culture as potential threats to

local beliefs (Esposito and Mogahed 2008; Faath and Mattes 2006; Hammond 2007; Kohut and Stokes

2006).

Hegemony is the motive for terrorismStern 05 ( Jessica, a fellow at the FXB Center for Health and Human Rights at the Harvard School of Public Health. She is an Advanced Academic Candidate atthe Massachusetts Institute of Psychoanalysis and one of the foremost experts on terrorism. She serves on the Hoover Institution Task Force on National Security

and Law. In 2009, she was awarded a Guggenheim Fellowship for her work on trauma and violence. Excerpt from "Addressing the Causes of Terrorism : Culture".

Publihsed by the Club de Madrid, March 8-11 2005. http://media.clubmadrid.org/docs/CdM-Series-on-Terrorism-Vol-1.pdf ) JAGardner Peckham does not believe that globalization is a motivating factor for terrorists: while

globalization increases the flow of trade and ideas, thereby increasing terrorists capacity to do us harm,

their interest in doing so is not a result of that process. The counterargument, which the author of this

paper and other members of the working group subscribe to, is that globalization and the need to

compete for jobs and ideas on a global scale feels humiliating, even if global productivity rises and

although, on average, most people benefit. Terrorists find a way to augment and strengthen this

feeling of humiliation among potential recruits. In this context, it is worth recalling the words ofBin

Ladens deputy, Ayman Al Zawahiri, who argues that it is better for the youth of Islam to pick up armsthan to submit to the humiliation of globalization and Western hegemony

Hegemony forces oppositional groups to terrorist ways

COT institute et al 08( Joint paper by the COT Institute for Safety, Security and Crisis Management; Netherlands Organization for AppliedScientific Research TNO; Fundacion para las Relaciones Internacionales y al Dialogo Exterior (ES); Danish Centre for International Studies and Human Rights; Institute

of International Relations Prague; Clingendael Netherlands Institute of International Relations. No specific authors given. Excerpt from their joint paper "Concepts of

TerrorismAnalysis of the rise, decline, trends and risk". Published by the Sixth Framework Programme December 2008.

http://www.transnationalterrorism.eu/tekst/publications/WP3%20Del%205.pdf )Hegemony and inequality of power. When local or international powers possess an overwhelming

power compared to oppositional groups, and the latter see no other realistic ways to forward their

cause by normal politicalor military means, asymmetrical warfare can represent a tempting option.Terrorism offers the possibility of achieving high political impact with limited means.
http://harvardfxbcenter.org/http://www.mipsa.org/http://media.clubmadrid.org/docs/CdM-Series-on-Terrorism-Vol-1.pdfhttp://www.transnationalterrorism.eu/tekst/publications/WP3%20Del%205.pdfhttp://www.transnationalterrorism.eu/tekst/publications/WP3%20Del%205.pdfhttp://media.clubmadrid.org/docs/CdM-Series-on-Terrorism-Vol-1.pdfhttp://www.mipsa.org/http://harvardfxbcenter.org/


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Heg = Genocide

Massacres and loss of autonomy define U.S hegemony, empirics prove

Taylor 12( Lucy Taylor, VP of the Society for Latin American Studies, lecturer and professor at Prifysgol Aberystwyth University. Excerpt from "DecolonizingInternational Relations: Perspectives from Latin America". Published by International Studies Review in September 2012. wiley) JA

From a coloniality of power perspective embedded in contemporary Latin America, the most obvious

binary which contributes to US dominance is the Native/settler binary. The USA was constructed

through a process in which the superiority of northern European settler people and their worldviews

was asserted over Native American societies.This took the form ofon-going territorial, economic, and

epistemological conquest over Native peoples throughout the period, but perhaps the most formative

experience, according to Shari Huhndorf, was the drive West in the nineteenth century (2001). This

pivotal moment of struggle and national myth formation consolidated the US nation-state in terms of

territory, migration, and economic expansion, as well as solidifying its national identity (Huhndorf 2001:

1964; Bender 2006: 193241). The colonial project of western expansion was characterized by

massacres, displacement, and deception, which decimated Native communities and asserted thesettlers military, plitical, and epistemlgical dminance (DErrico 2001). As land was settled, the

country became subdued and the enclosure of Native Americans in Reservations served to confirm the

hegemonic dominance of a nation-state, which could set the terms oflimited Native autonomy(Ostler

2004). Moreover, the mythology of the White pioneer who built ranches and towns in the wilderness

attempted to displace the Native peoples from their status of original Americans (Agnew and Sharp

2002; Wolfe 2006). This domination was territorial but also epistemic and ethnic, then, and the success,

coherence, and completeness of political domination and ethnic silencingplayed a direct role in

generating a cherent and cmplete visin f America. Thus, and in the words of Frederick Jackson

Turner in 1893, Moving westward, the frontier became more and more American (quoted in Huhndorf

2005: 56). This dominance was confirmed by the capacity of US culture to appropriate Native imagery

and practices in a wide range of scenarios from the movies to Scouting via World Fairs and fashion(Huhndorf 2001: 1978, 162202). Native Americans have never ceased to resist this onslaught and to

express the agonies of the colonial wound and the fresh imaginaries of the colonial difference (Alfred

and Corntassel 2005; Tyeeme Clark and Powell 2008), but the success f the American Dream made

for the dominance of the hegemonic settler culture(Churchill 1997).
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Heg = Racism/Sexism

American hegemony is intertwined with racism and sexism

Katzenstein et al 10(Mary Fainsod Katzenstein, Leila Mohsen Ibrahim and Katherine D. Rubin. Katzenstein is a Professor of American Studies andprofessor of Government at Cornell University. Ibrahim and Rubin are PhD candiates at Cornell university. This paper "The Dark Side of American Liberalism and

Felony Disenfranchisement" won the Heinz I. Eulau Award for the best journal article of the calendar year published by Perspectives on Politics December 2010.

Proquest) JA

Two interpretive frameworks provide a conceptual starting point in any analysis of liberal and illiberal

traditions within American democracy. These are the unitary liberalism of Tocquevillean provenance and

the multiple-traditions critique of the liberal hegemony thesis developed by Rogers Smith. 19 The

Tocquevillean thesis, as Rogers Smith depicts it, constitutes a long-lived "orthodoxy on American

identity."20 The Tocquevillean perspective adheres to a view of American history that identifies the

distinctive character of the nation as free-born, unburdened by the givens of aristocracy and status

hierarchy. By dint of this history, Americans are seen as baptized in the waters of egalitarian ideals and

liberal beliefs. Racism and other exclusionary beliefs and practices are bracketed as departures from

rather than constitutive of a common national ideological core. In his multiple-traditions critique, by

contrast, Rogers Smith describes this core national culture as an intertwining of three distinctive

traditions: liberalism, republicanism, and exclusionary forms of Americanism.21The multiple traditions

thesis sees American civic identity as forged through the historical forces of exclusionary as well as

egalitarian, moralistic as well as tolerant, ascriptive as well as achievement-based norms and practices.

The threads of exclusion are not just visible on the margins. The warp of racism, sexism, and other

ascriptive beliefs and practices is fully intertwined among the weft of liberalism and republicanism.


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Pemex Bad


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Pemex Collapse Now

Pemex collapses in the status quo

Kearns 11(Running on Fumes A critical look at Mexicos natural gas transportation and distribution infrastructure, Sean D. Kearns,Commander, United States Navy, 27 October 2011, http://www.dtic.mil/cgi-bin/GetTRDoc?AD=ADA555294, Pg 16) //EYEnsuring that PEMEX has adequate funds to re-invest in infrastructure each year seems obvious from a

business perspective, but as discussed this has not occurred. With almost two thirds of its annual

revenues going toward taxes (representing nearly roughly 40% of the federal budget), PEMEX has been essentially bled

dry and lacks the funds and inhouse ability to address all its woes.41 While the accumulated damage

from decades of undercapitalization cannot be undone overnight, taking the first step back should not be put off anylonger.The Mexican government needs to work with the leadership within PEMEX to identify and establish annual funding for re-investmentthat is in line with commercial industry norms. While this will mean reduced government revenue from PEMEX in the short term, it promises to

bring significant increases in overall revenue in the future, both from PEMEX and from the economic growth that a healthy natural gas

operation will bring

Pemex is bankruptMelgar 12 (The Future of PEMEX, Americas Quarterly, Vol. 6, Issue 3, Summer 2012. LOURDES MELGAR,http://www.americasquarterly.org/node/3781)//EY

The decline in production is particularly worrisome, since oil revenues are critical to the financial

solvency of the government, accounting for 35 percent of government income. The sustained high level in oil

prices has masked the net decline in crude exports, but a significant shift in the international oil market could result in

a severe financial crisis. That fear, and the perceived need to increase oil income, drove the 2008 Energy Reform.

The government currently relies on extracting revenue from petroleum production and sales rather thantaxation to finance the public budget. As a result, PEMEX's financial condition is determined not only by the market but by the policies of the

Secretariat of Finance and Public Creditwhere, even under the latest fiscal regime, 70 percent of PEMEX net income goes to paying taxes and

duties. Thus, despite being one of the top petroleum companies in the world, pemex is technically bankrupt, sharply

curtailing the possibilities for growth and investment for innovation.
http://www.dtic.mil/cgi-bin/GetTRDoc?AD=ADA555294http://www.americasquarterly.org/node/3781http://www.americasquarterly.org/node/3781http://www.dtic.mil/cgi-bin/GetTRDoc?AD=ADA555294


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Squo Solves Pemex Nati Gas Transition

Pemex is transitioning to natural gas solves impacts to oil and jumpstarts the

petrochemical industry

Latinvex 12(Mexico: Shale Gas Becomes Priority, Jeremy Martin, October 23, 2012,http://latinvex.com/app/article.aspx?id=312)//EY

The presidential election cycle in Mexico brought a host of policy proposals and election-year debates

over critical elements of national policy. But key among them is energy. Indeed, during his candidacy Enrique Pea Nieto spokeoften and forcefully about how his government would take on the energy challenges in Mexico.

Within the broad expanse of energy issues, there is an overarching topic of great importance for Mexico

and all of North America: the role of natural gas and development of shale gas reserves.Natural gas sales in Mexico have risen 70 percent in the last decade while production increased but 46 percent and imports from the United

States hit record highs in 2012. Pipeline infrastructure has become increasingly jammed and further complicated by the Reynosa plant accident.

Cuts by Pemex of natural gas supplies to industrial consumers underscore the challenge.

Mexico's increasing appetite for natural gas particularly for power generation bears mentioning. Indeed,

natural gas is increasingly replacing oil as a feedstock for electric generation in Mexico. Estimates indicate thatalmost 50 percent of electric capacity additions in Mexico over the next decade will be gas-fired, combined cycle generation.

But all is not lost. According to the Energy Information Administration (EIA), Mexico has the secondlargest shale gas potential in Latin America and the fourth largest in the world. Mexico counts around 16

trillion cubic feet (TCF) of natural gas reserves but a 2011 Energy Information Administration (EIA) report

indicated that Mexico has the second largest shale gas potential in Latin America, second only to

Argentina and the fourth largest in the world. The EIA report places Mexico's shale gas potential at 680 TCF.

The potential associated with the EIA figures for shale gas in Mexico has not gone unnoticed by Mexican

energy officials. Indeed, some have increasingly advocated for a "Shale Revolution" of their own and the

possibility for shale gas to jumpstart a lagging petrochemical industry. To wit, some senior government

officials have argued that Pemex should create a new subsidiary focused exclusively on natural gas to

spur nascent shale exploration and production, particularly given that shale gas technology and

expertise differ from that of conventional fields.Figures from Mexico's Energy Ministry indicate that ramping up a shale gas industry could mean investment between $7 billion and $10 billion a

year. And many cite the possibility to jumpstart the petrochemical industry. Moreover, without shale, natural gas production

in Mexico will not keep up with demand. But with shale gas development, Mexico could position itself to

transition from its current status as a natural gas importer to a huge international player when it comes

to natural gas.There are issues that policy makers in Mexico, especially in the incoming government, must take into account as they endeavor to seize its shale

gas potential.

Technology stands out as a key element for the successful development of shale gas in Mexico. Gainingaccess to the technology and know-how necessary to extract the gas in a cost-effective and environmentally secure manner is critical.

Pemex also plays a role. In mid-2011 Pemex completed its first shale gas well, tapping into the Eagle

Ford formation near the Texas border. More recently, Pemex has indicated that it will drill more than

150 wells through 2016 in an effort to better assess Mexico's shale gas potential. By the end of 2012,

three more shale gas wells should be completed by Pemex.

Mexic desnt need t integrate it can become self sufficient

Bailey 3/5 (Shale and Beyond: The Next Phase of Latin American Energy Integration, Jed Bailey, Cambridge Energy Research Associates,05 Mar 2013, World Politics Review, http://www.worldpoliticsreview.com/articles/12761/shale-and-beyond-the-next-phase-of-latin-american-

energy-integration) //EY

Thus it would appear that the prospects for further regional energy integration in Latin America are now at an intriguing crossroads. Recent

technological and economic trends suggest there is now less of an impetus for substantial integration .

New production from shale gas reserves in Argentina, Brazil and Mexico, and new discoveries of traditional reserves in Brazil,
http://latinvex.com/app/article.aspx?id=312http://latinvex.com/app/article.aspx?id=312http://www.worldpoliticsreview.com/articles/12761/shale-and-beyond-the-next-phase-of-latin-american-energy-integrationhttp://www.worldpoliticsreview.com/articles/12761/shale-and-beyond-the-next-phase-of-latin-american-energy-integrationhttp://www.worldpoliticsreview.com/articles/12761/shale-and-beyond-the-next-phase-of-latin-american-energy-integrationhttp://www.worldpoliticsreview.com/articles/12761/shale-and-beyond-the-next-phase-of-latin-american-energy-integrationhttp://latinvex.com/app/article.aspx?id=312


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Uruguay and, potentially, Paraguay, can increasingly make these countries self-sufficient in natural gas. This

democratization of natural gas supply, combined with growing environmental concerns about the development of large-scale

hydro projects, removes much of the economic incentive for power integration, as the widespread

availability of natural gas across the region removes a major source of long-term electricity price

differences across countries. Local gas plants can also backstop hydro units in case of drought, removing the need for hydro-dominated systems to link with neighbors with greater thermal capacity, since countries can now just build their own. Not building major hydro

projects also means fewer projects that require cross-border linkages to justify their construction.

Transition to natural gas now percieved by Mexican government, also jumpstarts the

petrochemical industry

GNV Magazine 13(Mexico puts natural gas as a transition fuel energy, March 1, 2013,http://www.gnvmagazine.com/eng/noticia-mexico_puts_natural_gas_as_a_transition_fuel_energy-2979) //EY

March 1, 2013. The Mexican Government expected that natural gas will become the primary fuel for

the energy transition from this year, according to the National Energy Strategy, presented to the

Senate.

The document prepared by the Secretariat of Energy notes that the use of this fuel will benefit in the

development of the country's energy matrix. Among benefits are observed that associated processing

costs are cheaper, and the estimated potential for exploitation is high. It adds that this fuel hasenvironmental advantages as compared with other fossil fuels, greater thermal efficiency and the

potential to detonate the national petrochemical industry.

It also notes that changes in the long-term strategy is based on three factors, including the discovery

and exploitation of natural gas reserves at low cost, mainly associated wi

Documents

Impact Turn File - MichiganClassic 2013 CT